Question 6 (10 marks)

Busy Bee Truck lines uses the unit-of-production method in depreciating its heavy-duty truck. On 1 July 2017 it purchased a new truck at a cost of $810,000. The residual value is expected to be $10,000. Over its 3-year useful life, the truck is expected to be driven 100,000 kilometres.

Required:

1. Prepare a depreciation schedule assuming the actual distance travelled were as follows:

• Year end 30 June 2018: 45,000 kms
• Year end 30 June 2019: 35,000 kms
• Year end 30 June 2020: 20,000 kms

2. Prepare the adjusting journal entries to record depreciation for the year ended 30 June 2018.